Improving Public Debt Management
In the OIC Member Countries
67
The share of shortterm debt in total debt in the OIC member countries has decreased from
68.1% in 2006 to 54.5% in 2015. This share is slightly higher than the worldwide average of
52%. Official creditors sign contracts with maturities similar to the worldwide average at
around 21 years on average. Private creditors extend their credit for an average period of
approximately four years, which is below the worldwide average of five years. The maturity of
new debt contracts is significantly larger in lowincome countries than in middleincome
countries, which might be explained by the larger share of official creditors in lowincome
countries. Hence, the average maturity of new contracts is largest in the African regional
group.
The average share of domestic debt in total debt in OIC member states has slightly increased
since 2006 and lies at around 41.5% in 2015, which is a share above the worldwide average.
Lowincome countries have a lower share of domestic debt (31%) than middleand highincome countries (41.9%). In highincome countries the share of domestic creditors has
increased since 2008 and hovered at around 77.7% in 2015. However, individual OIC member
countries differ considerably in their shares of external debt.
The largest share of external debt in OIC countries was denominated in U.S. Dollars (51.3%),
followed by Euro (15.4%), Special Drawing Rights (6.6%) and Japanese Yen (3.2%) in 2014.
The share of external public debt denominated in U.S. Dollar and Special Drawing Rights (SDR)
has increased between 2006 and 2014, while the share of external public debt denominated in
Euro has been relatively constant. The share of external public debt denominated in Japanese
Yen has decreased.
Since 2010, OIC member countries have relied almost exclusively on loans with fixed interest
rates. The average interest rate on public debt has been comparatively stable and low in OIC
member countries over the last decade (e.g. 1.9% in 2014), but obviously differs significantly
for different countries. Those OIC member countries borrowing from official creditors do so at
preferential rates (on average about 1.2% in 2014). The average interest rate for private
credits was about 3.9% in 2014, a rate which was higher than the worldwide average. Lowincome countries face lower interest rates than middleincome ones, presumably because they
have access to concessional lending as well as development and promotional loans. Average
interest rates in the Arab and Asian group have decreased over the last years, while average
interest rates in the African group have increased since 2006.
Islamic finance has become an important part of the financial systems in several OIC member
countries. Most importantly, many governments in OIC countries use sukuk in their public debt
management. Sukuk are financial certificates commonly referred to as " sharia compliant"
bonds, which do not pay interest. The investor rather acquires a share of the underlying asset
or project that the sukuk bond is linked to. Overall, several OIC member countries plan to
increase the share of Islamic finance instruments in the next years.
In most OIC member countries, a specialized department at the Ministry of Finance is
responsible for public debt management. Alternatively or additionally, in a number of
countries a department at the central bank carries out debt management operations. However,
only a few countries have established fully independent debt management offices. In contrast,
in several countries not one single entity is responsible for public debt management, but
several departments in different institutions and committees, mostly located at the Ministry of
Finance and the central bank, share relevant tasks.